Healthcare Issues for Businesses Indiana Advanced Aerospace Manufacturing Alliance December 5, 2008
Over 45 million Americans – including 8 million children – lack health insurance. Eighty percent of the uninsured are in working families. Census Bureau, August 2008 Kaiser Family Foundation, The Uninsured: A Primer 2006.
Skyrocketing healthcare costs are making it increasingly difficult for employers, particularly small businesses, to provide health insurance to their employees.
Economic toll of being uninsured: • Increased morbidity and mortality • Poor management of chronic diseases • Personal bankruptcies – over half caused by medical bills • Productivity loss • Bad debt • Inefficient and ineffective care Davis, The Costs and Consequences of Being Uninsured, Medical Care Research and Review. 60(2):2003.
Financial Cross-Subsidization ($8) ($440) ($17) ($136) ($80) ($560) ($1136) $1136 $100 Medicare 55% $92 $100 Medicaid 8% $83 $100 Self-Pay 7% $20 $100 Commercial 30% $137.87
Health insurance premiums have doubled in the last 8 years, rising 3.7 times faster than wages in the same time period. Kaiser Family Foundation and Health Research and Educational Trust. (2008). Employer Health Benefits 2008 .
Employers who offer employee health benefits are substantially subsidizing the healthcare delivery system. For most employers, healthcare expenses are the least well understood component of their operating costs.
Obama Healthcare Plan National Health Insurance Exchange • Promote competition among private insurance companies • National competition to lower premiums • Federal regulation to promote fair competition • Comprehensive coverage for all applicants • Simplified paperwork and ease applications • Portability
Obama Healthcare Plan Reduction of Uninsured • Mandatory coverage for children < 18 years • Employers health benefits • Mandatory for large and medium sized employers, or • % of payroll expense paid to National Health Plan • Small employers business health tax credit • Federal re-insurance for catastrophic claims • Funds paid must offset employee’s health premium expenses • Expand eligibility for Medicaid and SCHIP
Ground rules may change substantially. What’s the best course of action? What provides best marginal cost change for employer? What provides best option for employees? What provides best community option?
Employer’s Analyses of Options • Base-line information • Employer’s total healthcare cost experience • What categories of costs are important to the employer? • Employer’s expense trends • Employer’s objectives for healthcare expenses • What changes in the annual rate of healthcare costs must the employer realize • What gaps exist between the employer’s projections of future healthcare expenses and objectives
Employer’s Analyses of Options • Why do gaps exist? • What factors are influencing the growth of the employer’s healthcare expenses? • Healthcare utilization • Healthcare pricing
Employer’s Analyses of Options • What management options exist to manage factors influencing healthcare expenses? • What portfolio of management options exist to management the gap analyses? • Cost to implement • Time to realize benefits • Amount of benefits projected to be realized • How will strategies be managed to make mid-course adjustments?
Questions? Steve Witz Director Regenstrief Center for Healthcare Engineering Purdue University firstname.lastname@example.org (765) 496-8303